The California commissioner ordered FAIR Plan to provide more commercial coverage

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California insurance commissioner Ricardo Lara ordered the FAIR plan in late November to implement its mandated increases to the decade-long commercial property coverage limits offered to businesses.

“My order is part of an ongoing commitment to help California businesses thrive as our economy recovers from the COVID-19 pandemic,” Lara said in a statement. “One of the main concerns that many business owners, big and small, have raised with me is their challenges in purchasing insurance, which in turn affects their ability to serve their customers the best they can.”

Lara’s move increases the combined cover limits for the FAIR plan under the Division I commercial real estate program from $ 4.5 million to $ 8.4 million and under the Division II business owner program from $ 3.6 million Dollars to $ 7.2 million. These coverage limits have not increased since at least 1997 and 1994, respectively, according to the California Department of Insurance.

Lara’s order revises the FAIR plan’s operational plan and does not allow the FAIR plan more than 60 days to submit a rule change request for review and approval by the CDI for these new increased commercial coverage limits.

The insurance companies operating the FAIR plan then have 90 days after approval to implement the plan changes ordered by the commissioner.

The FAIR plan was required under the Insurance Act to provide the CDI with a revised operating plan within 30 days in response to the Commissioner’s prior order dated Oct. 12, describing how it would increase its industrial property coverage limits.

The Commissioner’s action was taken because the FAIR plan failed to meet this reasonable and customary deadline, according to the CDI. The commissioner relies on his authority under the Insurance Act to write the revisions of the operating plan for the FAIR plan himself and instructs the FAIR plan to implement these revisions now.

subjects
California Commercial Lines business insurance

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